Can Tougher Environmental Laws Spur Economic Growth?

[Frodo]

according to this article, they could:

For economic growth, tougher environmental laws?

By Mark Clayton | Staff writer of The Christian Science Monitor

When tiny Clipper Windpower builds its first factory, perhaps this year, it will automatically become America's second-largest manufacturer of wind turbines. The Carpinteria, Calif., company even has a hot new technology that should be a sure thing.

But it's still hunting for financing because being a wind-turbine builder in the United States is tough, so tough that only one other US manufacturer exists.

In 20 years, the US has gone from leading the world in wind-energy manufacturing - with at least a dozen enterprising firms - to lagging badly. Companies in Germany, Denmark, Spain, and elsewhere have grabbed the technological lead and now hold roughly 80 percent of a $8 billion market that's growing 25 to 35 percent a year.

The reason? Some experts point to lax clean-air laws in the US. That's right. Weak environmental regulations may hurt, not help, industries by blunting their technological edge. Such contrarian logic, controversial among economists, is about to be put to the test.

By not signing the Kyoto Protocol, the US has set itself apart from most of the industrialized world. So will its companies flourish, thanks to lower environmental costs - or lose out to foreign firms that cut greenhouse gases?

When it comes to green technologies, some contend the record is pretty clear.

"There are major technological and competitive benefits in getting to clean up your act," says Amory Lovins, who heads the Rocky Mountain Institute, an energy and environment think tank in Snowmass, Colo. "By passing on Kyoto, the US will reduce its competitive advantage compared to overseas firms paying attention to carbon reduction."

http://www.csmonitor.com/2005/0224/p15s02-sten.html

[Moooooo]

Tougher enviornmental laws will hurt certain industries, but create jobs and growth by creating a whole new industry.

[ATFFL]

Tougher enviornmental laws will hurt certain industries, but create jobs and growth by creating a whole new industry.

Properly constructed laws, yes.  Kyoto is designed to make the US bend over and take it very, very hard in a sensitive place.

The trick is to encourage incestment a few years before the laws go into effect.  This allows the technology to be in place and competition to have begun before the requirements go into place.

[angus]

I agree with Tedrick, both in the spirit and letter of his post.  (if I may be so presumptive.)  In fact, while ecological consideration can spur economic growth, the current laws and possible future ones can hinder growth.  I'll quote myself from march 12:

Capitalism can actually reward business who are environmentally responsible.  A major problem is that the Left, over the years, has successfully lobbied for such stringest legislation in the US (particularly in CA) that corporate entities must account for every bit of waste from the "cradle to grave."  This results in exhorbitant costs to the taxpayers, of course, and that's what Republicans are always bitching about.  But it goes deeper than that.  For example, consider the possibility of 'linked industries':  say a local cement manufacturing company would like to buy waste products from tire manufacturers or cola producers or T-shirt makers to burn to heat their kilns and then use their own gaseous combustion products to flow into a third industry, as a fuel.  Whatever.  This is entrepernurial imagination.  This potentially recycles waste and perhaps reduces cost, thereby increases profit.  But no.  The wastes, at each step of the way must be dealt with according to strict bureaucratic standards.  Written by a large and costly bureaucratic staff.

And again from April 22:

Earth Day can be painful for republicans, but it doesn't have to be.  In keeping with the upsurge of interest in the libertarians ("I want total freedom but am unwilling to spend one dime on a standing army and navy to protect that freedom"), I thought it might be useful to point out that not every capitalist exhibits Randian contempt for mother earth.  Here is one organization which provides information to conservatives who do NOT believe that environmentalism is antithetical to industry:

http://www.repamerica.org

I am not a member of their organization, but I occassionally find their take on environmentally-related stories refreshing.  You might imagine that I am the only Republican at the San Francisco Bay Area chapter Sierra Club meetings.  It can be lonely.  As a Republican and an active member of the Sierra Club, I enjoy being flamed by "both sides"  Some of you might also enjoy the sensation as well.

[Inverted Things]

Without a habitable environment, there would be no economy. Without an economy there would still be a habitable environment. It's clear where our priorities should lie.

[Filuwaúrdjan]

On certain things yes. There are some things that could be done primary industries that would increase their long term viability, the number of people employed in them and also improve the enviroment.

[angus]

ten thousand!!!  that's very impressive.  Either you are very interested in US public policy, or you have no social life. 

also, I agree with your post. 

[○∙◄☻¥tπ[╪AV┼cVê└]

Finding a new energy source for after Peak Oil will help the economy a huge amount. Kerry called for new energy research during his campaign, but American voted for the Texas oil man ticket.

[The Duke]

Finding a new energy source for after Peak Oil will help the economy a huge amount. Kerry called for new energy research during his campaign, but American voted for the Texas oil man ticket.

I bet flowers grow out of Kerry's ass too.

[Gabu]

Yes, tougher environmental laws certainly can make the economy better, in fact.  There are times that, when a company sells its product at the market price, there are hidden costs (e.g., pollution) that the natural workings of the market fails to take into account.  These unaccounted-for effects are called "externalities", and are a form of market failure, in that the market fails to ensure that the most optimal solution is achieved.

Economists are in debate with regards to how one should go about fixing these externalities, but one suggestion that I personally think makes sense comes from an economist named Arthur Pigou: tax the companies producing the externality by an amount equal to the cost of the externality.  This, called a Pigovian tax, essentially alters the cost to the company such that it now equals the total cost of production, and shifts the supply curve such that the new price and quantity is actually more optimal than the market price and quantity, rather than causing deadweight loss.

That's not to say that all environmental laws can make the economy better.  For example, taxing an amount greater than the cost of the externality makes things just as screwed up as they were initially.